The Effect of Self-Control Mechanisms on Household Saving Behavior

Abstract

The Survey of Consumer Finances was used to assess the explanatory power of self-control mechanisms, controlling for other important constructs from the standard life cycle model of saving. The analysis focused on saving goals, foreseeable expenses, and saving rules as mechanisms of self-control. Household saving behavior was strongly affected by mechanisms that help households practice self-control. Households that had saving rules were much more likely to spend less than income than those that did not have saving rules.

Keywords: behavioral life cycle hypothesis, life cycle hypothesis, saving behavior, self-control, Survey of Consumer Finances